The Canada Pension Plan Investment Board and Encino Energy are acquiring Chesapeake Energy Corp.’s Utica shale oil and gas assets in Ohio for $2.6 billion.

Through the jointly-formed Encino Acquisition Partners, an organization formed in 2017 to seek out significant, high-margin oil and gas production and development assets in the U.S., the transaction includes more than 900,000 net acres of leasehold with about 900 existing wells. 

At 98 per cent and a $1.3-billion investment, the CPPIB will hold a large majority stake in the partnership, while Houston-based Encino will invest the remaining cash and operate the acquired assets.

Read: CPPIB commits equity to U.S. oil and gas acquisition company

“We are pleased to support EAP’s acquisition of these highly attractive Utica shale assets, which provides CPPIB with meaningful exposure to a leading North American natural gas play and aligns with the growing focus on energy transition,” said Avik Dey, managing director and head of energy and resources at the CPPIB, in a press release.

“This transaction represents a unique opportunity to acquire a foundational asset that has a large inventory of wells with a well-established production history, and will be managed by Encino, whose management has deep operational and development expertise in the Appalachian region. Through EAP, we are continuing to efficiently expand our energy and resources portfolio in key U.S. energy markets as we seek to further diversify the CPP fund. We look forward to building on our ongoing partnership with Encino to pursue high-quality energy assets in the lower 48 states.”

The transaction is set to close in the fourth quarter of 2018.

 

Read: CPPIB to invest $570M in oil and gas company

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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